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(Note that, as above, the adjustment to the inventory and cost of sales figures may be made at the year-end through an adjustment to the closing stock but has been illustrated below for completeness). The inventory (asset) of the business will increase by the $2,500 cost of the inventory and a trade payable (liability) will […]

However, LIFO inventory management may not be the best choice for managing perishable goods or items with limited shelf life. Although it may provide income tax benefits by reducing profits, it’s not suitable for all situations. While FIFO and LIFO are both cost flow assumption methods, the LIFO method is the opposite https://www.bookstime.com/blog/airbnb-accounting-and-bookkeeping of the […]

Companies using accelerated depreciation methods (higher depreciation in initial years) are able to save more taxes due to higher value of tax shield. You must generally depreciate the carryover basis of property acquired in a like-kind exchange or involuntary conversion over the remaining recovery period of the property exchanged or involuntarily converted. You also generally […]

Such decision-making is common to companies that manufacture a diversified portfolio of products, and management must allocate available resources in the most efficient manner to products with the highest profit potential. Contribution margin and regular income statements can be very detailed, requiring an in-depth understanding of the business’s inner workings. Earnings Before Interest, Taxes, Depreciation, […]